As the major labels tanks rumble towards YouTube’s lawn, TuneCore CEO Scott Ackerman claims that independently distributed artists are increasingly seeing the video channel as both a goldmine and the greatest marketing weapon in their arsenal.
He also believes that Japan is about to embrace streaming in a major way and hints heavily that TuneCore is going to bulk up for further international expansion by buying up smaller players in the distribution sector.
“Our artists see both YouTube and the streaming channels as a way to get their music out,” he tells Music Ally. “For most of our artists, that is their number one thing – they want their music heard. It’s not about money. They want their music out worldwide so everyone can hear it.”
Last year, TuneCore began claiming and monetising its labels and artists’ music being used on YouTube in other people’s videos and this is proving highly lucrative for them. In 2015, TuneCore acts earned $3m from this source and Ackerman projects it could grow to as much as $8m by the end of this year.
“There is money out there on YouTube,” he says. “It’s almost like found money. That is how they [the artists] are looking at it.”
While not all TuneCore artists will be overjoyed at the use of their music online, the company is also swift to take down unlicensed music if the artists insist on it. “One of the great things that we do is that we offer all kinds of services for our artists – and they can pick and choose,” he says. “If an artist doesn’t want to participate in YouTube or they don’t want to have their music on Spotify, it’s their choice. We can give them everything or we can limit it down to one or two channels.”
If what the IFPI, RIAA and BPI are all calling the danger of the “value gap” on ad-funded channels (notably YouTube) is the dominant record industry theme of 2016, the second biggest issue is around exclusives. While no act on TuneCore will have even a tiny fraction of the same impact as a Drake or a Beyoncé when windowing their albums, they are not averse to experimenting with exclusives.
“It depends on how we define ‘exclusive’,” says Ackerman. “For our artists, it’s a good tool to pick and choose based on how they think they can best monetise. For example, we have several artists who will still do the pre-order with iTunes first and they’ll get that out there, letting it ride for a while. There is a definite fanbase who want to get the music first and will pay for it. Then the releases will move over to streaming. I think artists are getting very creative at that and we are assisting them with that.”
In the streaming space, he cites Deezer in particular as being “very strong” for TuneCore’s artists and defines the arrival of Apple Music as “complimentary as opposed to cannibalistic” in relation to iTunes. He is also wary of predictions in the industry that the download has served its purpose as is heading for the scrapheap of moribund formats.
“I don’t think downloads will ever go away – just like physical will never go away,” he suggests. “Our artists are embracing streaming – but they have the choice of being able to pick downloads, streaming or both. Most of the new stores were are adding now are streaming-based. Some do downloads. It is going to take time to see.”
With over a third (35%) of the 200,000 active artists on TuneCore coming from outside of the US, international expansion and localisation is a major focus for the company. It already has localised versions in North America, the UK, Australia and Germany – with Russia and South America both booming areas for artists coming to the platform.
It is TuneCore Japan, however, that represents its biggest bet on the future of digital music. It is a major territory where subscription streaming has yet to make any noticeable impact but Ackerman sees this as a market on the cusp of a major explosion.
“Streaming is starting to take off and we are really seeing that there,” he says of the Japanese digital market in 2016, with mass adoption of smartphones proving the catalyst. “We have been there for three years now and this year we are really seeing a big change. The typical market roadmap has been physical, then download, then steaming. I think you are going to see Japan skip the download part and move right into streaming.”
He also regards China as a market bursting with potential but is wary of charging in before fully understanding the esoteric processes at play in the country’s music business. He sees the company’s expansion into Japan as offering a launch template for China.
“We would probably [do a JV with a Chinese company to enter the market] as that’s what we did in Japan,” he says of possible future expansion.
“In the US, we have all learned our lesson about certain markets that you can’t go into and run the way you think you can. If you look at the [TuneCore Japan] website, it looks very crowded – but that’s the Japanese market, right? We wouldn’t have known that if we didn’t partner with someone local. Their whole marketing campaign is completely different from ours. Even if it wasn’t mandated in China [that foreign companies can only enter as part of a JV with a local company], I think we would do that anyway.”
Just as with the major labels a decade ago, consolidation is proving a defining force in the independent distribution space today. Sony now owns The Orchard (having already merged with IODA) while Universal has a stake in INgrooves. Charles Caldas of Merlin has attacked this in the past, saying that majors are buying up or buying into independent distributors in order to “game” their market share and give them greater clout in licensing negotiations.
“I think there will be more consolidation in the future,” predicts Ackerman. “We are definitely looking at ways to continue to grow the business. We are the largest digital distributor today to iTunes and we are growing very fast. I am not sure all the players that are out there today will be able to sustain that. There is going to be consolidation.”
So will that mean being bought? Or buying up smaller players? “Oh, I think it’ll definitely be us looking, if the market is right, at acquiring other,” he says.
Does he have his eye on anyone in particular? “Not right now. We are just working really hard on growing the market with TuneCore. As we continue to offer more services for our artists – as they tell us they want one platform where they can go to it and get everything they need – that is our goal.”
It is arguably the case that this is a process already in motion, following April’s “strategic partnership” with Believe Digital.
“With the Believe Digital deal, where we can move artists up to a label services deal and really offer them everything they need, that is going to make us the dominant player in the world,” he says. “That’s our goal. We have a very strong brand. We are very transparent for our artists. They get 100% of their royalties and they get to see that. They know that we pay them every penny that they earn. We are in a really good position to continue to grow that market.”
He is bullish not just about new markets opening up internationally but also TuneCore’s broader expansion in the sector – all the while remaining independent.
“Whether we acquire [someone else] or just continue to open up more websites and have that local content and services for artists where they can pick and choose and remain independent, we will be very successful,” he says. “We want to make it as broad as possible with data but keep it as simple as possible. That is important for our artists – not to make things complicated.”
Scott Ackerman will be one of the judges for the MidemLab startup contest at Midem this month.